Payment Culture in the Automotive & Components Sector
Late and slow payment is a persistent challenge faced by small businesses in the Automotive & Components sector in the UK. In 2023, this issue continues to threaten the financial stability and growth of small businesses in the industry.
The Automotive & Components sector is a vital part of the UK economy, with a significant contribution to employment and GDP. However, small businesses in this sector are often reliant on large manufacturers for their revenue. These manufacturers may delay payment or stretch out payment terms, causing cash flow issues for small businesses.
In our analysis we look at largest companies in Automotive & Components and feature the 12 slowest and 12 fastest payers in the sector. If we compare last year to this year, we can clearly see the difference in payment cultures. The worst are getting worse, with 9 out of the 12 slowest payers remained the same or got even slower to pay and the best are getting better, with 10 out of the 12 fastest payers remaining the same or paying even faster. These trends tell us there is a clear difference in attitude and culture around those who choose to pay their suppliers fast, or slow.
Inesos UK (reducing their average payment time from 33 days to 8 days) and Car Giant (reducing their payment time from 29 days to 8 days) should be congratulated for doing an excellent job at reducing their already impressive payment times. However, Ferraris Piston Services remains one of the worst in the sector (increasing their average payment time from 92 to 101 days) and Stapletons Tyre Services (increasing their average payment time from 87 to 97 days) both have shown that improving their slow payment practices to suppliers is not a priority.
The impact of late and slow payment in this sector can be devastating. Small businesses may struggle to meet their own financial obligations, such as paying suppliers, wages, and taxes. This can lead to a spiral of debt, missed opportunities, and ultimately, business failure.
In conclusion, late and slow payment continues to pose significant challenges to small businesses in the Automotive & Components sector in the UK in 2023. While there are measures in place to address the issue, small businesses must take proactive steps to mitigate its impact and safeguard their financial stability and growth.